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New York Enacts Amendment Expanding Permissible Deductions From Employee Wages

September 18, 2012

On September 7, 2012, Governor Andrew Cuomo signed into law an amendment to New York Labor Law §193, expanding the circumstances where an employer may make deductions from an employee’s wages.

Prior to the recent amendment, the only permissible wage deductions were: (1) those deductions required by law, or (2) deductions that are expressly authorized by the employee in writing and for the benefit of the employee. To that end, the law considered deductions for insurance premiums, pension or health and welfare benefits, contributions to a charitable organization, U.S. bonds and labor union dues to be deductions for “the benefit of the employee.”

The amendment expands the list of permissible wage deductions to include:

  • Prepaid legal plans;
  • Purchases made by the employee at events sponsored by a charitable organization affiliated with the employer;
  • Amounts paid for discounted parking or mass transit (such as tokens, fare cards or vouchers);
  • Fitness center, health club and/or gym membership dues;
  • Pharmacy, cafeteria and vending machine purchases made at the employer's place of business;
  • Purchases made at gift shops operated by the employer where the employer is a hospital, college, or university;
  • Tuition and fees for pre-school, nursery, primary, secondary, and/or post-secondary educational institutions;
  • Expenses for day care, before-school and after-school care; and
  • Payments for housing provided by non-profit hospitals or their affiliates.

In addition, the new law now permits an employer to make deductions from an employee’s wages for (a) the repayment of wage advances or loans made to the employee, and (b) the recovery of wage overpayments made where the overpayment was due to the employer’s mathematical or other clerical error, with an employee’s written consent. However, in making such deductions, an employer is required to comply with the other provisions of New York Labor Law regarding wage payment, such as the timing, frequency, duration and method of such recovery, and limits on the periodic amount of such recovery. The amendment also requires an employer to develop and implement procedures for an employee to dispute the overpayment, and provide notice to the employee of such procedures before the employer deducts any such overpayment from the employee’s wages.

The new law does not take effect until November 7, 2012. Additionally, it is expected that the New York Department of Labor will issue administrative guidance as to the timing, frequency and notice requirements for these newly permissible wage deductions, and develop a model procedure for employers to adopt so that an employee may exercise the right to dispute the deduction. As such, employers are advised to refrain from making any deductions from an employee’s wages in accordance with the amendment until its effective date.

For more information regarding the amendments to the New York wage deduction law, please contact:

Catherine P. Wells, Member of the Firm
(973) 530-2051 | cwells@wolffsamson.com  
Margaret O’Rourke Wood, Member of the Firm
(973) 530-2063 | mwood@wolffsamson.com  
Denise J. Pipersburgh, Associate
(973) 530-2090 | dpipersburgh@wolffsamson.com